Zambia’s Emerging LPG Market Sees Steady Growth, Offers Investment Opportunities
Zambia’s liquefied petroleum gas (LPG) market is witnessing significant growth as more households and businesses switch to the cleaner energy alternative, moving away from traditional fuels such as charcoal and firewood.
Despite its relatively young status, the market’s expanding footprint is increasingly drawing attention from investors looking to capitalize on the rising demand for LPG in the Southern African nation.
A 2019 study by the Energy Regulation Board (ERB) sheds light on this upward trajectory. According to the study, the average LPG demand between 2010 and 2018 stood at 3,250,428 kilograms per annum.
The data reveals a consistent increase in consumption, with 2018 marking the highest demand recorded at 7,006,198 kilograms, a notable rise from the lowest figure of 657,622 kilograms recorded in 2012.
The surge in demand is particularly pronounced in recent years. The ERB report highlights a near doubling of LPG consumption between 2017 and 2018, reflecting the broader trend of Zambians embracing this alternative fuel.
Specifically, the demand jumped by 47.8 percent from 4,741,380 kilograms in 2016 to over 7 million kilograms in 2018, underscoring the rapid shift in consumer behavior towards more sustainable energy sources.
This growth is fueled by several factors, including increased awareness of the environmental and health benefits of LPG over traditional fuels. LPG burns cleaner than charcoal and firewood, resulting in fewer harmful emissions, which is increasingly important in a country where air quality concerns and deforestation are rising.
Moreover, as the cost of LPG becomes more competitive, and as infrastructure for distribution improves, more Zambians are finding it a viable alternative for cooking and heating needs.
However, despite these positive trends, the LPG sector in Zambia is still considered to be in its early stages of development. The limited uptake so far means there is ample room for growth, particularly as the government and private sector work together to improve accessibility and affordability of LPG across the country.
For investors, this presents a wealth of opportunities. The sector’s nascent stage offers a variety of entry points, from establishing infrastructure for importing and wholesaling to retailing and manufacturing LPG cylinders. Additionally, there is significant potential in the revalidation of cylinders, a critical aspect of ensuring safety and sustainability in LPG usage.
The market’s current structure, however, is largely dominated by a few key players, leaving little room for smaller distributors to compete.
This lack of competition could be a double-edged sword: while it provides an opportunity for new entrants to establish a foothold, it also suggests that breaking into the market may require significant capital and strategic partnerships.
Nonetheless, the continued growth of Zambia’s LPG market is likely to attract more players, both local and international, who are eager to tap into the country’s rising energy demands.
The government’s ongoing efforts to promote cleaner energy sources, coupled with the private sector’s innovations in distribution and marketing, are expected to drive further expansion of the LPG market in the coming years.
As Zambia’s LPG market matures, it will be crucial for stakeholders to focus on developing robust supply chains, ensuring safety standards, and fostering competition to provide consumers with reliable and affordable access to LPG. With the right investments and policy support, Zambia could see LPG becoming a cornerstone of its energy mix, providing a cleaner, more sustainable future for its citizens.
